Meaning
Article 618 of the Civil Code of the People’s Republic of China is a statutory limitation that invalidates any contractual agreement to exempt or limit the seller’s liability for quality defects if the seller deliberately concealed those defects. This provision holds that a seller cannot rely on liability waivers if they acted in bad faith. If a manufacturer knows of a flaw in the goods but actively hides it, article 618 overrides any agreed limitation of liability.
Fraud Protection
Procurement departments benefit from this rule when dealing with untrustworthy suppliers who attempt to shield themselves behind complex contract waivers. When a seller intentionally conceals a design flaw, article 618 strips away their contractual protection. This mechanism ensures that the risk of hidden structural failures remains with the producing party rather than transferring to the unsuspecting buyer.
Judicial Standard
Regional courts apply a high burden of proof when a buyer alleges deliberate concealment under this provision. The plaintiff must present evidence that the factory was aware of the technical deviation prior to shipment. Such evidence often includes internal testing records or emails showing that the production team noticed the error but chose to package the goods anyway.
Once this bad faith is demonstrated, the court will refuse to enforce any liability caps present in the commercial agreement.
Operational Security
Quality control teams should document all pre-shipment correspondence to create a clear record in case a dispute arises. While article 618 provides a legal safety net, proving deliberate concealment is more difficult than simply enforcing a standard warranty claim. For this reason, maintaining robust inspection protocols at the factory gate remains the primary line of defense.
